Affordable Housing Hell; Randy Rowe’s Five Part Plan;
& ‘ Do YOU have the 22nd annual ALLEN REPORT?

When I started blogging for the now defunct Manufactured Home Merchandiser mag,

(Like billboards picturing former President George W. Bush asking, ‘Do You Miss Me Yet?’, I wonder if you feel similarly about that magazine? I sure do.),

I doubted there’d be enough fresh, interesting and compelling information to support this blog, Allen Letter professional journal and the Allen CONFIDENTIAL! newsletter. Boy, was I naive. That’s why this weekly posting contains at least two, three, sometimes four, short stories. And this week is no different. Chalk it up to lively reader response; a Five Part Market Share Recovery Plan worthy of attention & discussion among manufactured housing peers nationwide; and well, if YOU haven’t read the 50+ page, 22nd annual ALLEN REPORT, a.k.a. ‘Who’s Who Among Landlease Community Portfolio Owners/operators Throughout North America (in 2011)!’ you should get hold of one of the ‘only 300 copies printed’!

I.

Someone else has figured out how we, as a society, housing industry and nation, have gotten ourselves into ‘affordable housing hell’. What’s that? It’s that too common phenomenon (until recently) characterized by homebuyers, builders, and lenders encouraging would be mortgagors (i.e.‘The party who borrows the money and gives the mortgage.’) to frequently and greatly exceed the traditional 25 percent Housing Expense Factor (‘HEF’), intended to not overburden a homebuyer’s income stream. In last week’s blog posting we ‘splained’ how this 25 percent limit, when ‘fully loaded’ with principal, interest, taxes, insurance (a.k.a. ‘PITI’), and household utility expenses, but not telecommunication charges, allows for the modest, reasonable, even affordable purchase of a new or resale home. BUT, when homebuyers, builders, and lenders encourage a sale and mortgage transaction in which only P&I factors are included in the 25 percent HEF, while facilitating the ‘risky’ purchase of a much larger abode, greatly burdens the mortgagor with T&I factors, plus household utility expenses, but not telecommunication charges, above and beyond the mortgage payment. That’s ‘affordable housing hell’ – when and where we find 40 and 50 percent HEFs now decried by all sorts of ‘affordable housing’ folk, who not long ago, loudly extolled the virtue of ‘Everyone a homeowner!’

Here’s what one blog flogger (reader) – that ‘someone’ alluded to at the beginning of the previous paragraph, penned in response to last week’s blog on this timely and troubling topic.

“I wonder if this ‘duality of affordability’ (Reread previous paragraph) has been precipitated by the propensity of Generation Y to, ‘Have what my parents have NOW!’? *1 We raised our kids on the 25% factor (inclusive of PITI & utilities). Our daughter and her husband both work, yet struggle to fit their family of five into a home being paid for in accords with that 25% factor. Same with our son and his wife of two years, living in a house bought six years ago, again in accords with that same 25% factor.”

“Results? In both cases, George, they’ve followed the 25% guideline, and yes, endured difficulty at times, but now have equity and a home! Many of their friends and acquaintances, however, have lost homes, been bankrupted, or are barely scraping by with little prospect of making any headway in their lives financially. Both kids, at times, have coveted what a friend may have, that seems like ‘so much more’ (home). I’ve asked them to wait, and they do. Both now understand what ‘looks too good to be true, is probably not true, or affordable for them’.”

“So, is housing affordability really a question about what’s truly affordable; OR, is it really a question of self – discipline, and an understanding one cannot have all one wants to have now, and that one is not ‘entitled’ to anything? Perhaps this is a hard lesson our entire country needs to relearn, including greedy home manufacturers, street retailers, (chattel) lenders, even some manufactured home community owners.” (lightly edited)

II.

Those long active in the manufactured housing industry and landlease (nee manufactured home) community real estate asset class, have learned to look to certain individuals, some in dominant roles, others not; for information, guidance, and leadership.

As a veteran landlease community (‘LLCommunity’) owner/operator, consultant and author, I see myself in the information purveyor role, via this weekly blog, two monthly newsletters, occasional features or columns in various realty and manufactured housing trade publications, and books.*2

Randy Rowe, founder and chairman of Green Courte Partners in Lake Forest, IL., and teamed with David Lentz, heading American Land Lease in Florida, is one of those individuals who, in my opinion, while eschewing high profile leadership roles in some national trade bodies, is frequently looked to for wise and timely guidance, by his peers.

Leadership? We’ll turn to that tricky but also timely subject shortly and carefully.

This past Fall, at the 19th annual International Networking Roundtable in Phoenix, AZ., Randy Rowe keynoted a gathering of nearly 200 LLCommunity owners/operators from throughout the U.S. During his address, he shared a Five Part Market Share Recovery Plan for the Manufactured Housing Industry and Landlease Community Asset Class. Since that time, the gist of Randy’s ‘plan’ has appeared online and as a print reprint enclosed, as a lagniappe, with the Allen Letter professional journal, & elsewhere.

But ‘Here’s the rub!’ Not only were some of this industry and asset class’ top elected and salaried leaders in the room, when Randy articulated our timely and critical needs for

• Better manufacturer home warranties

• More chattel (personal property) financing sources

• Ensuring economic security of homebuyer/site lessees (residents)

• Multiple listing service(s) access

• National marketing (image improvement) efforts

at least one national trade advocacy body meeting has occurred since that September event, and this challenging, forward – thinking Five Part Market Share Recovery Plan was not on the agenda!

So, here we have a seasoned businessman, with ‘two feet in both business models’ or the industry/asset class, well known for his previous successes at ELS, Inc. (nee MHC, Inc.) & Hometown America, but whose Five Part strategy (A form of guidance) has not been given an airing on the broader, national scale, encompassing both major segments of our ‘double dual industry’.*3 Why do you suppose this is the case?

That’s where leadership returns to this word picture. Life’s too short, to verbally or otherwise, tear down what’s already in place, unless another life is at stake – but even then, often only the courageous will act. Besides, I’m a believer in the bromide, ‘If you’re not part of the solution, you’re part of the problem!’ OK so far?

With that said, the HUD Code manufactured housing industry has been dying (dead?) for the past decade or (now) longer. While there have been some short – lived initiatives to understand, then reposition, ourselves in the housing marketplace (Think New Orleans several years ago, and the national leadership changes & retirements since then), we’ve also been a victim of economic circumstances. Anything of this leadership nature since? Not that I’ve experienced, at any of the broad – based national venues (Thinking MHCongresses and annual meetings). Closest attempts to such ‘taking control of one’s destiny’ have been two National State of the Asset Class (‘NSAC’) caucuses, on 2/27/08 in Tampa, FL. & 2/27/09 in Elkhart, IN., when LLCommunity owners/operators and leaders convened. And this past Summer, there was a First National Manufactured Housing Finance Roundtable, hosted by a U.S. Senator and HUD executive, that came ‘close’ to what needs to be done. Following a morning long meeting of presentations and open discussion, during which the GSE’s represented there, made it clear they wanted nothing to do with the manufactured housing industry ‘going forward’ – What happened? The meeting ended at Noon! In this observer’s opinion, leaders should have announced the Roundtable would continue into the afternoon, open to any businessmen and women passionately concerned about the future of chattel finance in the MHIndustry! That did not happen. And do we even want to get into what some have termed the Arkansas & Texas initiative that materialized in June, popped up again in October, and now what?

So, here’s the question two successful NSAC caucuses, an unsuccessful Finance Roundtable, and questionable AR/TX initiative beg to have answered: ‘Why can’t present day industry/asset class leadership call for a national gathering of individuals with, as has oft been stated in the past, ‘with skin in the game’ to meet, articulate, and agree on a plan and a path out of this sorry state of affairs? Where to begin? With Randy Rowe’s Five Part Market Share Recovery Plan for the MHIndustry & LLCommunity Asset Class’! For a free reprint of Randy’s presentation at the aforementioned Networking Roundtable, simply phone the MHIndustry HOTLINE: (877) MFD-HSNG or 633-4764 or (317) 346-7156.

III.

This blog was penned and edited during the last week of December. On Wednesday, I turned in the final edited copy of the 22nd annual ALLEN REPORT to pre – press, pursuant to printing and binding, for initial distribution with the January 2011 issue of the Allen Letter professional journal. Present subscribers to the newsletter are in for a real treat! As has been past practice, they receive (For the last time, sad to say) a FREE copy of what’s now a 50+ page 5 ½” x 8 ½’ booklet, chock full of timely, strategic information, helpful statistics, and a whole lot more resources, in more than a half dozen appendices! This is a limited press run of 300 copies, and once they’re gone, it’s unlikely there’ll be any more. So, if an AL subscriber, look forward to your late holiday present! If not an AL subscriber, there’ll be about 100 copies left, after the AL distribution, available for $450.00 apiece, post paid. To order now, phone either of the two numbers listed at the end of the previous paragraph.

Why these major changes to the ALLEN REPORT format and pricing? Read last couple weeks of blog postings at this website.

A word of caution. Every page of this year’s ALLEN REPORT clearly states this is a legally copyrighted document, from beginning to end, and must not be copied under any circumstances, without the express written permission of the author. Please honor this request! GFA

IV.

ERRATA. Know that the Day of (three) Seminars focused on landlease community operations, home sales, and self – finance matters, at the Louisville MHShow, will be held on 12 January, not the date published earlier in this blog. Sorry ‘bout the misunderstanding.

Furthermore, 3 – 7 January is your last opportunity to sign – up for the one day Manufactured Housing Manager (‘MHM’) professional property management training and certification program, to be held on 11 January, in the vicinity of the Kentucky State Fair Grounds in Louisville, KY. To register, phone (317) 346-7156. Cost? $250.00 per MHM candidate. Very Special Offer: If you register, attend and become certified as an MHM at this particular 1/12/2011 class, you’ll receive a copy of the aforementioned $450.00 22nd annual ALLEN REPORT at no extra cost – or for FREE! What a deal!

And on 13 January, at the nearby Crowne Plaza Hotel, Ed Hicks will be teaching a day long seminar on the FHA 207(m) program. To register, phone (813) 661-5301.
***
End Notes.

1. Generation Y, a.k.a. Echo/Millennial Generation, born between 1981 & 2000 – sometimes called part of the WE Generation (1978 – 2000) oft characterized by the phrases ‘Instant gratification’ and ‘Earn to spend!’ to describe their mindsets and actions.

2. Owners/operators. Once a year, I like to remind my readers that David Helfand, of Helix Fund, American Residential Communities (‘ARC’), and Riverside Communities, based in Chicago, IL., is the originator of that inclusive term for those who ‘own’ and those who ‘operate’ LLCommunities in North America.

3. Double dual industry. A proprietary term describing HUD Code home manufacturing & distribution (i.e. retail sales), on one hand; and landlease community development & investment (i.e. to include property management), on the other hand.